After TikTok: The Camera of the Metaverse

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Today’s piece discusses the intersection of social networking and the metaverse including an interview with Stanislas Coppin, CEO of Powder, a gaming social network with a vision to become the “camera of the metaverse”. If you’re interested in consumer tech, social networking or the open metaverse, this is a piece you won’t want to miss! Read further for more detail on:

• The changing basis of competition for social networks including the surging importance of interoperability, pseudonymity, creator focus and world of entry

• The evolution of social networks since the launch of SixDegrees and what Generation IV will look like

• Shifting demographic trends and what Gen Alpha (yes we’ve exhausted the English alphabet!) will seek out in next generation social platforms

• How Gaming could be more accessible and inclusive as a creative class vs. short form media creators on TikTok and Instagram

• How a gaming integration network could serve as the wedge / port of entry into metaverse social networking

• The large and meaningful opportunity in dynamic gaming NFTs

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The next piece will be about the opportunity in lab-based molecularly brewed coffee including an interview with Andy Kleitsch, CEO of Atomo Coffee.

Changing Basis of Competition for Social Networks

Social media networks have evolved meaningfully since SixDegrees, the first material social network emerged in 1997. I attribute much of the subsequent social network innovation to Zuck’s next level meat grilling acumen: 

When SixDegrees first emerged there was much more limited internet penetration (19%) across the US, let alone around the globe and that usage was substantially less frequent than it is today. Therefore, it was much harder to build a competitive advantage as an early mover with network effects as SixDegrees’ network was constrained by lower internet and PC penetration vs. Myspace and then Facebook.

There’s a lot of great literature on why Facebook beat out Myspace and while it was a combination of multiple factors some of the most prominent ones included: stronger UI, greater user safety protocols and an innovation mindset of developing apps on top of Facebook as a platform. Facebook set the pace for what constituted a safe, intuitive and connected base for a social network. While Facebook has continued to scale and remains the top social media platform from a user count perspective, the basis of competition has been shifting in nuanced ways with each passing generation that have created opening points for new entrants to emerge (some of which Facebook now owns, tried to buy or copies with new features). 

Each factor across innovation generations still remains a basis of competition, but my point is that the relative differentiation created by a given factor becomes less relevant over time as it becomes table stakes and more commonplace. Moreover, these factors are cumulative are often build upon one another. For example, TikTok would be generation III because of its creator focus / structuring of its discovery feed, but also wins because of its optimization for mobile and capitalizes on being video first.

The emergent generation IV social network will leverage the metaverse as its world of entry, connecting persistent pseudonymous identities (avatars, gaming characters) in an interoperable network of virtual properties. This draws upon and builds on key characteristics of prior generations in some meaningful ways:

1.  Builds on the creator focus of generation III by unlocking new monetization opportunities for creators made possible by a virtual world environment

2. Transforms a broad-based focus on user privacy in generation III to the concept of pseudonymity through avatars. I’d argue this pseudonymity also creates the ultimate user safety system (generation I) by disentangling virtual identity from real world identity, but still being able to hold bad actors in virtual worlds accountable

3. Adds artificially rendered video (gaming / virtual video) as a key unit of interaction (generation II)

4. Unlocks an unparalleled ability to compete on generation II’s apps / add-ons through interoperability between worlds and applications

Social networking infrastructure that ties into the metaverse will have the largest network (generation I) by viewing each captive network as additive rather than mutually exclusive.

Innovation Evolution Driven by Tectonic Generational Shifts

The shifting basis of competition is driven both by the pace of technological innovation but also more saliently by shifting demographic trends across age groups. Generation Z is increasingly gravitating more towards video first, mobile first and ephemeral formats like TikTok and Snapchat, while earlier generations are very engrained in Facebook. Each generation is increasingly moving more towards gaming and virtual world adoption. Nearly 70% of Gen Z males call gaming a core part of their identity. More than half of Roblox’s users are under the age of 13. Roblox sees one of the highest average monthly visits per visitor when compared to other entertainment properties.

For Generation Z, there is a meaningful difference between video games and virtual worlds. More and more “gaming” activities are intimately associated with a sense of identity, purpose and community. I believe this trend will continue to accelerate for Generation Alpha (age group after generation Z). I know what you’re thinking: “Damn, we’ve already exhausted the English alphabet and need to use the Greek Alphabet now?”

The rise of digital celebrities and their appeal to Gen Z is also indicative of the importance of the virtual world to pop culture and collective identity. For example, Brud’s Lil Miquela already has over 4M+ followers on Instagram. While TikTok and game development communities like Roblox will undoubtedly be very important social media properties for Generation Alpha, there is an opportunity for a new social media network to emerge that allows users to document and share their lives in the metaverse similar to how we post videos and images of our real world selves on TikTok and Instagram. While it is still early innings, I believe this platform could be Powder, a social network to share clips from your favorite games and connect with new gamers. With the expanding role of gaming and virtual worlds for new generations, Powder, could use gaming as a wedge to build out the capabilities, network and differentiation to capture the value of a generation IV social network purpose built for the metaverse, generation alpha and beyond. While more traditional social media players like Facebook, Twitter, etc. can certainly play a role, they are burdened by a need to build more features to retain users for older cohorts (boomers, Gen X), etc. that are aging out. TikTok, Roblox and specific virtual world communities straddle Gen Z and Gen Alpha and certainly will capture a large portion of the Gen Alpha market. Below is my best bucketing of some select social media properties by generation.

If you think of social networks along the continuum of human evolution, early web players (MySpace and SixDegrees) are like chimps that have evolved already to specific virtual worlds and development communities like IMVU (avatar-based social network) and Roblox. These current platforms are cyborg-like and meld our real-world and digital identities. The next evolutionary phase is a social network that exists purely to connect these virtual worlds and document our digital lives:

To learn more about Powder’s vision to be the “camera of the metaverse”, I caught up with Stanislas Coppin, Powder’s CEO & Co-Founder. Please enjoy our conversation below.

My Conversation with Stanislas Coppin (CEO & Co-Founder of Powder)

SN: Could you tell me more about the founding story of the business?

SC: My first startup was in 2012 called Mindie. It was an application to make music videos on mobile. It was the first music camera which was copied by Musical.ly which became TikTok. We are known for creating what was the basis for music videos on mobile that fed into TikTok’s platform. In 2018, we built our second company with the same goal of cracking the next generation video format on mobile. We have iterated on a couple of models over the past two years before settling on Powder. During 2019, the thesis was finding a format between social, video and AI. We pivoted multiple times and a key part of those pivots was creating a community on Discord to understand the needs of gamers today around social, video and gaming. When we found out about the proposition that was edited video game clips, we focused entirely on building out that strategy. We got 50K people on our Discord and then built the Alpha and Beta with our community. One month after, we launched on the app store in April 2020. Now we have 2M+ downloads and something like 400K+ MAUs.

SN: What are the key capabilities of the platform today and what is the core issue you are solving for gamers?

SC: The idea behind the product is that you are watching video on a feed. You can add your own video on the platform and then edit with music, video, text, shake, etc. Some of the modifications you can make to the video are very game specific. There is a social network built around that where gamers interact with one another and can meet new gamers to play with. We launched a features called Clans where you can launch a private room to meet friends or new gamers and then play with them by launching the game from Powder. We have an AI that is running in the background that recognizes the best and most social media worthy moment of the game. Our AI extracts that for you to make it easy to share content afterwards and focus on your game while you play. Right now the infrastructure around getting the content from your devices is very early and our goal is to fix that and make it even more simple. We connect with all consoles, PC and mobile to aggregate all content types on Powder so gamers can easily share it. Our goal in the future is that this content is pushed automatically after your gaming sessions, so users just have to play and then we do the rest. 

SN: You mentioned the ability for new gamers to meet through Powder. What is the primary method of connection you hope to facilitate between gamers going forward? What about existing communities of gamers that already know one another?

SC: Right now people come for the tools and they stay for the community. The retention is based on social direction. The watching part is a bit like TikTok. Retention is solid on the viewer side but it is strongest for the content creators and contributors where the business is most sticky. The goal is to build out more on the creator side, like messaging in rooms and creator commenting. Gamers are already connected together in-game through voice, Discord or through existing platforms. What people need today is a way to connect after the game to get the memorabilia of all of the videos. They connect to Powder to search for someone to play with and after for others to comment on and engage with their videos. Not all of the videos are about performance, a lot of the videos are for fun. Lots of our viewers love to watch video memes tied to gaming content. They love to watch the new skins. It is kind of a live style format for the virtual world.

SN: As users launch games together through powder, is lead generation for studios one of your primary monetization strategies? How else are you thinking about monetization as you scale?

SC: We are not monetizing yet, but we are seeing the larger gaming social platforms today like Twitch and Discord lean in on tipping for monetization to get creators to stay in-platform. We don’t want to reinvent the wheel when it comes to tipping. Then we will likely focus on a monetization lever that is unique to Powder. This will probably focus around the distribution of content across the platform. Larger, more traditional gaming studios are scared about how network changes will impact their distribution and ability to acquire gamers. We have a specific space for gamers where gamers will be able to launch and watch games. It is the perfect space for native advertising for the publishers. 

SN: Are you worried about Twitch or even a multi-property gaming studios building out tools to replicate Powder? How important are i) your mobile-first approach and ii) potential for interoperability in building a moat?

SC: We aren’t scared at all about Twitch. They already do tipping, but nobody really knows about it. They understand that their business is around the reactions of the gamers while playing. It is very unclear whether they would go down the path of focusing on short clips. In terms of competition, we are the largest company focused on short game clips and with the most users. Our closest competitors are Instagram and TikTok, but their content is very real world video-focused and this is not their core competency. We have an edge because we are creating gamer specific tools. This way we can be much more differentiated. It is impossible to launch a game recorder on TikTok or Instagram and would be very weird. We are not scared of those traditional social elements or the studios. For this business, you need to be able to source across all of the different gaming properties so lack of interoperability is an issue for any gaming studio that enters the space who does not have the neutrality needed to be successful. Studios want a neutral third party to play this role. We have been approached by many studios who are interested in creating deep integrations with powder. 

SN: How do you see Powder fitting into the vision of the metaverse? As there is increased interoperability between games and more activities are done through gaming, what role do you see powder playing in that infrastructure ecosystem? Do you see the social network creeping into other areas of our life as gaming expands in scope?

SC: For us, Instagram is to capture real life and Powder is to capture the virtual life. We want to become the camera of the metaverse and that is our entrypoint into metaverse infrastructure. First, we are building an inventory of videos with our AI model of what are the best moments within the virtual world. Once we own this part, the goal is to explore the metaverse and be apart of it by creating content for it. A lot of companies are trying to build worlds or captive metaverses. Our view is that it will build itself through the games. Each game property is expanding and we will start to see those worlds collide without passing through old UI of closing and reopening a game. We also believe virtual reality will add to the frictionless of this experience where you can traverse the meta-world without the traditional app ecosystem we have today. We are already seeing in our content that people are creating videos that are linked to something happening in the real world. For example, for the funeral of George Flloyd, we had some users in Grand Theft Auto host a digital funeral in honor of George Flloyd directly in the game and they shared their content through Powder at the same time the actual funeral was happening in the real world. This is hybrid style content we view as heading towards the metaverse. You are seeing similar activities across games, like weddings in animal crossing. The important piece is building the bridge across games. We are trying to enable that first with sourcing and then with new features. The ecosystem is still very fragmented with different publisher platforms. First we are democratizing sourcing and then we are driving towards the metaverse.

A Differentiated Approach to Gaming Communities

Powder sits at the intersection of in-game social networking and creation tools like Twitch / Discord and short-form real world social networking like TikTok / Instagram. While Twitch and Discord focus on in-game chat (Discord) and longer form streams in the context of a game (Twitch), Powder lets users connect with other gamers of all skill levels through viral, meme-style video clips all in a virtually native setting:

It is fascinating that the Powder team first built up a digital community on Discord and then actively involved that community in the building of the product and then monetized it via a mobile application. This creates numerous meaningful competitive advantages including:

1. Higher starting adoption rates and customer loyalty because bespoke product features were actually crowdsourced from the Discord community

2. Authenticity that is difficult to replicate because the product emerged from the gamer community vs. being built for another community and being exported into gaming. This point is critical as gamers are a notoriously demanding consumer group that is skeptical of outsiders that come in to try to sell them products or services in a disruptive or disingenuous way. I believe this is what will make it difficult for TikTok or Instagram to expand into this area of social networking, which will become an important wedge into the metaverse as virtual worlds connect through an open ecosystem

3. Greater leverage over gaming studios who have a desire to reach a core gaming audience that is both highly engaged and likely has a higher willingness to spend on in-game items. This gives Powder a competitive advantage when it comes to sourcing gaming / virtual world integrations, which I will discuss further towards the end of this piece

Relative to traditional social media, Powder’s AI technology makes it a much more seamless experience to create and share content that is not burdensome on either the game-playing experience or on the creator. TikTok’s rise has led to a surge in the creation of influencer houses where influencers quite literally go and record professional videos with one another to post to the platform. While this is great for production value, it is not easy to compete with that type of content creation without disrupting your daily activities. Even for Instagram and Snapchat, people will disrupt family vacations, alter their schedules and retake many, many pictures to get the perfect post they can share on those social media platforms. We’ve all been there with that annoying friend who is just there for the social media picture. I even documented my own reaction the last time this happened with some friends.

Because Powder uses AI to automatically extract the optimal moment for a viral clip from in-game play, the act of generating the content does not stir up similar disruption. This means Powder as a social network medium most rewards talent over production quality. Influencers can edit their underlying clip afterwards through Powder and add cool special effects, but the quality of the core clip is tied to the underlying, undoctored game experience. I believe this dynamic makes Powder influencing more accessible than Instagram or TikTok influencing:

Greater influencer accessibility will create stronger networks with higher creator retention and is more likely to prevent the emergence of two separate creator classes within virtual worlds that we are seeing emerge on more standard social networking platforms. 

Further, the way the content is generated is actually beneficial to driving both stickiness of gaming influencers / creators and gaming studios. Outside of streaming tipping on Twitch, the content ecosystem on Powder gives gamers another avenue to make money off of their passions through gaming in a very frictionless way. From the publisher side, it enables them to drive higher sales on in-game items and skins as it turns these items from a passion / status purchase into a means of generating income for creators as they help to enhance the “production quality” and potential virality of their short form gaming clips. Powder is also great for creators in that it is structured in a way that makes it easy for gaming influencers to be discovered. For example, it has a feed that is dedicated to highlighting great videos specifically from first time users of the platform, to elevate the status of new users on day 1:

Further, as gaming communities become more ingrained on Powder, the platform becomes even more instrumental as a potential distribution channel for brands, especially for multiplayer games where gamer connection is particularly important to generating user activity. Publishers benefit from greater in-game engagement, higher willingness to pay (WTP) for skins / in-game purchases and diversified distribution channels for their games.

Virtual World Content Integrations are Building a Meaningful Metaverse Moat

Powder is taking the view that the metaverse will likely emerge through the connection of existing games and virtual worlds vs. arising from a closed / captive system that scales to be so large that it conquers the world. In attacking the gaming market, it is building a strong moat through its network of integrations with some of the largest gaming properties. Powder currently integrates with and processes video on behalf of leading virtual worlds / gaming properties including Fortnite, Minecraft, Roblox, League of Legends and more.

These integrations position Powder at the center of all of these virtual worlds in documenting the most important gaming moments across worlds and connecting people to share these moments. This integration network has flywheel effects over time as more gamers join Powder on the consumer side. It will become more difficult to replicate as more games are added since gamers prefer an aggregated platform across which to document their experiences. If you believe in the open metaverse view, this existing integration network makes Powder a logical long-term candidate to document interoperable virtual experiences (even those outside of gaming) across the metaverse. As the types of activities we do in the metaverse accelerate beyond gaming (think shopping, attending concerts, work, socialize), these activities will likely be layered onto existing virtual worlds that have aggregated strong networks with community effects. Powder is positioned with its integration network to already extract the most share-worthy moments from these expanded use cases in our virtual lives. This thesis becomes even more interesting when you think about how advances in virtual reality could accelerate both the time spent in the metaverse and the types of activities individuals conduct in the metaverse. Although its current use case is gaming, Powder’s integration network will scale to help us document the ever-expanding frontier of the metaverse.

While there is a lot of important infrastructure that will need to be built out for the metaverse (payments, digital identity, commerce and more), Powder is well positioned to leverage its integration base to become the social network of choice in the metaverse. I hope you enjoy this matrix-style promo video I made for Powder:

Dynamic Video Game Art and NFTs

Because Powder tracks from which games and which gamer profiles originate a unique gaming clip, it could leverage its platform to establish provenance and transparency of gaming media and work in conjunction with NFT marketplaces to mint virtual world NFTs. The media provenance stems from the AI extraction technology designating exactly when a clip was created and the transparency comes from being able to track how proprietary clips are used across interoperable virtual worlds. As in-game NFT-based items become more prominent, I also wonder if Powder could play a role in policing the black market for counterfeit / fraudulent in-game items through enforcing the aforementioned provenance systems against fake / purported replicas. While this is not functionality Powder has today, the network they are building both could benefit from this technology and is best positioned to build it. This diagram shows how Powder could fit into the process of minting and tracking NFTs across a multiverse ecosystem.

When you think about the supply chain behind a video game NFT, the game developer / game studio is providing one of the inputs that creates the art piece. Other input building blocks include user-generated effects and audio (think crowdsourced Snapchat filters) that augment the gaming moment. Powder plays into this ecosystem in the following ways:

1. Powder helps the creator (avatar) actually create and mint the NFT through i) its AI video extraction technology that grabs the core content of the NFT and ii) by connecting the creator with a marketplace of user generated add-ons to enhance the NFT

2. Powder then could integrate with NFT marketplaces to connect creators with distribution for their NFTs. Powder provides the provenance layer here to the marketplaces to insure that the gamer contributing the clip as an NFT corresponds to the identity of the gamer who originated the clip

3. As virtual items are brought through the open metaverse by the NFT buyer, Powder’s integration network (which extends across virtual worlds) provides a transparent system to track fraudulent virtual items / improper uses

4. What is interesting about NFTs is that they can be programmed with smart contracts such that as that are transferred / sold in secondary markets between avatars, royalties to the NFT creators can be programmed back in. Through its integration network, Powder could work with the future payment rails network of the metaverse (TBD) to facilitate royalty payments to the creator and to other input providers (game publishers and creators of the UGC add-ons) proportionate to their creative value-add

Relative to traditional image, text or video file NFTs, I believe gaming NFTs have the potential to be a much richer art form that are a) more tailored to the digital world and b) will command a higher willingness to pay from digital art enthusiasts. Creators / NFT exchanges could work with game publishers / virtual world developers to make these NFTs much more interesting by making them dynamic. Imagine how cool it would be if a Call of Duty NFT changed based on these factors?

1. Changes in the political system / outcomes of real-world military missions

2. The map background changed based on the location you happened to be working from

3. Background music was customized based on your mood as surmised based on facial recognition technology

4. You could swap in your own avatar for the primary avatar in the NFT

5. Certain items or characters update automatically as the publisher pushes virtual world updates

To me, these factors will determine the differences between internet-enabled art vs. internet-created art. Beeple’s JPEG art is already trading for up to $69 million? I can’t even begin to calculate how much a modern art and gaming enthusiast would pay for one of these dynamic video game pieces.

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